- Larry Hu, an economist at Macquarie Securities
Business activity in China's manufacturing sector slowed considerably last month as new orders fell, fuelling speculation the Chinese government may step up stimulus measures to revive growth in the world's second biggest economy. The final HSBC manufacturing PMI came in at 48.9, against economists' forecast of 49.4 and lower than the preliminary estimate of 49.2. A reading below the important 50-mark threshold points to contraction in the sector. The report showed new orders slumped at the fastest rate in a year while production levels stagnated. HSBC's data came after an official survey released last week showed that manufacturing activity remained at 50.1, unchanged from March. Analysts said the different readings reflect the greater weighting given to smaller, export-led companies in the private survey. The official measure, however, has a greater proportion of big state companies.
China's economy showed the slowest quarterly growth in six years in the beginning of the year amid a downturn in the property sector, overcapacity in heavy industry and sluggish export demand. Beijing has tried to underpin the moribund economy by stepping up infrastructure spending, encouraging cutting interest rates and offering tax cuts, while avoiding the same sort of massive lending binge it used to boost the economy after the 2008 global financial crisis. Larger companies have generally been the first to benefit.
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